[RAM] RAM Ratings affirms PKNS's AA1/P1 issue ratings

RAM Ratings has affirmed the AA₁/Stable rating of Perbadanan Kemajuan Negeri Selangor’s (PKNS or the Group) perpetual RM3 bil Islamic Medium-Term Notes Programme (2021/-) and the P1 rating of its RM1 bil Islamic Commercial Paper Programme (2021/2028).

The ratings incorporate an uplift from PKNS’s stand-alone credit standing, reflecting our expectations of a ‘very high’ likelihood of extraordinary state support, if required, in periods of financial stress. This assessment is based on the state agency’s very important role in executing key strategic initiatives for the Selangor state government, including affordable housing and green energy and healthcare projects as well as the planned development of Carey Island Port.

On a standalone basis, PKNS’s financial performance was weaker than expected in FY Dec 2024 and 1H FY Dec 2025, posting pre-tax losses despite steady revenue. Losses were mainly attributable to the energy segment, coupled with higher depreciation and finance costs. Adjusted funds from operations debt coverage dipped to 0.08 times in FY Dec 2024 (FY Dec 2023: 0.10 times). That said, we anticipate profitability to improve moving forward as the Pulau Indah power plant (PIPP), which commenced commercial operations in March 2025, stabilises. The progressive take-up of residential projects launched in 1H 2025 and anticipated completion of an approx. RM400 mil land sale will also support the Group’s full-year 2025 performance.

The operational commencement of PKNS’s new hospital and renewable energy assets may provide earnings upside and enhance income stability over time. However, near-term execution risks remain as the Group expands into less familiar business areas. Despite modest debt coverage metrics, PKNS’s strong balance sheet will continue to provide financial flexibility for operational and capital expenditure needs. Adjusted gearing was a healthy 0.41 times as at end-June 2025. As most upcoming debt is expected to be project-financed and non-recourse, the balance sheet impact should be manageable. Given the still-nascent stage of hospital operations and limited cashflow returns from PIPP, credit metrics are expected to remain broadly stable at current levels over the next two years.


Analytical contacts
Hani Hamizah Nor Hashim
(603) 2708 8240
hani@ram.com.my

Thong Mun Wai 
(603) 2708 8255
munwai@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my